A blog on the intracacies of the Workers' Compensation system as it is today. Workers Comp can be a trying experience for all involved, but the employers are the ones paying the premium bill. We audit or review Workers' Compensation policies and reserves for overcharges. (c)2001-2010 Copyright J&L Insurance Consultants, Inc. (c) 2009-2010 Workers Comp Term Of The Day

Sep 25, 2008

My Company Received an Payroll Audit Notice, What Do We Do Now?

This is one of the most popular questions that we receive about the Workers Compensation premium process. A workers comp payroll auditor contacting a company can make for a stressful situation. From what I have seen, the word audit tends to make someone feel they have done something wrong.

A payroll audit is just what it is - an audit of your company's payroll to make sure that your company has paid the correct premium. I think the word "correct" should be changed to "more." Unless there is a reduction in payroll, almost all audits we have seen either leave the premium "as is" or increase the premium owed.

There are a few things your company can do to make the audit process easier:

Have concise and complete records available. The auditor may ask for "everything." Request a list of what is needed for the auditor. Provide no more or no less than the requested amount of records. Spreadsheets are an invaluable aid.

An audit is a contentious situation. Try to be as congenial as possible.

Do not be intimidated. This seems to be a pattern of when we are called in at the end of a workers comp audit. We have seen the auditors try to intimidate the employers more now than in the past.

While the audit has to fit in the auditor's schedule, the audit also has to fit into your company's schedule. As indicated in the last post, do not refuse the insurance company's auditor access to the records. As with any type of audit (tax, insurance, etc) the refusal may send a red flag that there is something amiss.

Ask the auditor at the end of the audit to provide all workpapers that had to do with the audit. You have a right to have a copy of them, as they are the basis of your audit.

Make sure that the auditor knows who is a sub-contractor, temp, volunteer or any other type of worker besides the normal positions.

The first time that someone has to go through a workers comp payroll audit can be a very tense situation. Good luck with the audit. If you feel uncomfortable, it may be good to call in an expert.

About Me

Name: James Moore

Location: Raleigh, NC, United States

James has over 20 years of experience in insurance claims and underwriting, specializing in Workers' Compensation. He has adjusted, supervised, and managed the administration of Workers’ Compensation claims in 20 different states. His work experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Rehabilitation Unit for school personnel in NC.
James's educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associates in Claims designation (AIC); and an Associates in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. He has been certified as an insurance instructor by the NC Department of Insurance.
James is on the Board of Directors and is the Treasurer of the North Carolina Mid-State Safety Council. He has published a manual on Workers’ Compensation, three different claims processing manuals, and has written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers.